ACC3200 Chapter Notes - Chapter 5: Management Accounting
14 Jun 2018
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Management Accounting Chapter 5 Notes
Difficulties in recognising and measuring environmental and social impacts
• Conventional management accounting excludes measurement of environmental and
social impacts.
• For some companies, the impact costs remain hidden
o Although may be substantial
• Some organisations now measure some of these ‘forgotten’ costs.
• For example, a drop in the value of brands and in corporate image
o Due to adverse environmental or social impacts of an organisation’s activities
may be recognized
o Impact sometimes estimated in dollars.
However, environmental and social impacts can be difficult to recognise and report because:
• Future ecological and social issues are not yet known;
• The many costs and benefits are external and can occur outside of the organisation
• Many costs and benefits are difficult to measure in financial terms
Future ecological and social issues are not yet known
• Difficult in determining the future environmental and social impact of current
decisions and operations
• Not aware of what aspects of the environment and of society may be valued by future
generations.
• There are many work practices and operations that will have future environmental and
social impacts that are not able to currently able to be assessed.
o Eg; the growing interest in developing and growing genetically modified
(GM) crops.
o This provides great business opportunities for many organisations.
o Many scientists believe that these crops will have no future adverse impact on
the environment or on the population who consume these products,
o Long-term consequences unclear.
